Nippon Steel and ArcelorMittal, two of the world’s largest steel companies, have turned their attention to India amid weakening demand in Japan and the energy crisis in Europe. The ArcelorMittal Nippon Steel India joint venture has announced two new initiatives to expand operations in India.
New construction and capacity expansion of upstream and hot-rolling facilities at the Hazira integrated steel mill in Gujarat. The purchase of port, electric power, and other assets from the Essar Group, an Indian conglomerate. ArcelorMittal world’s second-largest producer of steel. Headquartered in Luxembourg, it was created in 2006 by the acquisition of European steel maker Arcelor by India’s Mittal Steel.
Expansion in India offsets ArcelorMittal’s troubles in Europe, where it plans to shut down a blast furnace in Bremen and a plant in Hamburg due to high energy prices and weak demand. It also offers a significant growth opportunity for Nippon Steel, which faces a shrinking domestic market. Steel production in Japan has been on a downtrend since 2014.
Steel demand in India, on the other hand, is expected to remain on a growth track well into the next decade – supported by the growth of the population and economy, the government’s “Make in India” industrialisation program, and the country’s growing allure as an alternative investment destination amid decoupling from China.
New facilities to be built at the Hazira mill include two blast furnaces, two sintering facilities, and three coke furnaces for ironmaking; three basic oxygen furnaces and two continuous casting machines for steelmaking; and one hot strip mill. Crude steel production capacity at Hazira should increase from about 9 mn tons in 2021 (actual production was 7.4 mn tons) to 15 mn tons per year by mid-2026 at a cost of about 410 bn rupees (US$5 bn). High-grade steel production for the auto industry will be a priority.
Infrastructure assets to be acquired from Essar, at a cost of approximately $2.4 bn (200 bn rupees), include port facilities in Gujarat, Odisha, and Andhra Pradesh and; power generation and transmission facilities serving the Hazira mill. India is aiming for smooth transportation of raw materials and steel products among manufacturing sites located in the west, east, and south India, and for export; a stable and low-cost supply of electric power; operating cost reductions after making improvements to the acquired facilities, and the development of infrastructure for future expansion.
